405 F.

2d 94

Daisy B. STONE, Appellant,

v.
Edley Craighill Nicholas STONE and Richard Fielding Stone,
III, Appellees.
No. 12576.

United States Court of Appeals Fourth Circuit.

Argued October 10, 1968.
Decided November 29, 1968.

Richard F. Stone, Lynchburg, Va., for appellant.

William Rosenberger, Jr., Lynchburg, Va., for appellees.
Before SOBELOFF, BRYAN and BUTZNER, Circuit Judges.
SOBELOFF, Circuit Judge:

This case presents an interesting question concerning the proper coordination of

the jurisdictional requirements of the Judicial Code in diversity cases with
provisions of the Federal Rules of Civil Procedure favoring liberal joinder of
claims and parties.

Plaintiff Daisy Stone brought an action in the United States District Court for
the Western District of Virginia against her daughter-in-law and grandson,
relying upon diversity of citizenship and the requisite amount in controversy as
the basis for federal jurisdiction.1 She is a citizen of California and the
defendants are citizens of Virginia. In her complaint, Mrs. Stone alleged that
she had created separate trusts for the purpose of providing for the education of
her granddaughter Edley C. Stone and her grandson Richard F. Stone, III. The
latter is a defendant in this action. Edley C. N. Stone, the other defendant, is the
daughter-in-law of the plaintiff and the mother of the two grandchildren for
whose benefit the plaintiff established the trusts. Edley C. Stone, the
granddaughter, is not a party as she has moved to Tennessee and is not subject
to the jurisdiction of the court.

The complaint alleged that both trusts have terminated and that, according to
the terms of the trust instruments, the remaining trust assets reverted to the
plaintiff but have been misappropriated by the defendants. Inexplicably, the
certificates of corporate stock which were donated to the trusts were not
transferred to the trustee's name but were placed and permitted to remain in the
names of the trust beneficiaries. Defendant Edley C. N. Stone is charged in one
count of the complaint with unlawfully and wilfully diverting from the plaintiff
the stock which had been held in trust for Edley C. Stone's benefit. Of the total
damages sought, the amount attributable to this claim is $8,321.05.

In a second count, the defendant grandson, Richard F. Stone, III, is charged

with wrongfully refusing to endorse to the plaintiff the stock certificates which
were part of the trust established for his benefit. Edley C. N. Stone, mother of
the grandchildren, is alleged to have "aided and abetted" this tortious conduct
and is named co-defendant in this count of the complaint. The value of this
stock, including accumulated dividends, for which the plaintiff seeks redress is
$5,583.00.

Both defendants moved to dismiss for lack of the the requisite jurisdictional
amount on the theory that distinct claims against several defendants may not be
aggregated for the purpose of satisfying the jurisdictional requirement. The
District Judge concluded that the defendants' point was well taken and ordered
dismissal of the action. The plaintiff appeals.

We think the case should not have been dismissed for lack of jurisdiction. The
plaintiff has stated two separate claims against her daughter-in-law and a single
claim against her grandson. Rule 18 of the Federal Rules of Civil Procedure
permits the claims against the daughter-in-law to be joined in a single action.
Under the rule, a plaintiff may join "as many claims, legal, equitable, or
maritime, as he has against an opposing party." The fact that joinder is
permitted does not of course mean that the requisite amount in controversy is
present. However, it is settled law that a plaintiff may aggregate his claims
against an opposing party and thereby satisfy the monetary requirement for
federal jurisdiction. Barron & Holtzoff, Federal Practice and Procedure, 24, at
117 n. 56.4 (Rules ed. 1960); 1 Moore, Federal Practice 0.97, at 882 (2d ed.
1964); Wright, Federal Courts, 36, at 102 (1963). See, e. g., Alberty v.
Western Surety Co., 249 F.2d 537 (10 Cir. 1957); Pearson v. National Society
of Public Accountants, 200 F.2d 897 (5 Cir. 1953); Snyder v. Wylie, 239
F.Supp. 999 (W.D.N.C.1965). Judge Chesnut, speaking for this court in
Provident Mutual Life Insurance Co. of Philadelphia v. Parsons, 70 F.2d 863,
864 (4 Cir. 1934), stated that "a single plaintiff having several claims, each less
than the jurisdictional amount, may properly combine them for the purpose of

establishing the requisite amount in controversy where they can be properly

joined in one suit."
7

The District Court therefore had jurisdiction to entertain the claims against the
defendant Edley C. N. Stone, since their aggregate is in excess of $10,000.

II
8

The question remains whether the plaintiff's claim against Richard F. Stone, III,
may be litigated in the District Court along with the claims against his mother.
For reasons to be stated, we conclude that the District Court also has
jurisdiction to decide the claim against him.

Although neither in the District Court nor on appeal did the parties advert to the
question of joinder, it should be noted that Fed.R.Civ.P. 20 permits the claim
against the grandson to be joined with the claims against the daughter-in-law.
The rule provides in part:

10

All persons * * * may be joined in one action as defendants if there is asserted

against them jointly, severally, or in the alternative, any right to relief in respect
of or arising out of the same transaction, occurrence, or series of transactions or
occurrences and if any question of law or fact common to all defendants will
arise in the action.

11

It seems clear that the count charging the defendants with conspiracy in the
tortious refusal of the grandson to endorse the stock certificates does assert a
right to relief against them jointly which arises out of the same occurrences.
The common question of fact presented is whether the grandson's conduct was
in fact tortious, for if it was not, the daughter-in-law cannot be said to have
aided and abetted his wrongful activity.

12

We now consider the question of jurisdiction over the claim against the
grandson. Since this claim is for no more than $5,583.00 it falls below the
minimum jurisdictional amount. However, this is not dispositive of the issue.
The requirement of 1332(a) is an "action" in which the "matter in
controversy" exceeds $10,000, and we think the critical inquiry is whether the
entire lawsuit may be treated as an "action" that meets the monetary test.

13

In a recent case, Jacobson v. Atlantic City Hospital, 392 F.2d 149 (1968), the
Third Circuit had before it the precise question presented here: when there
exists the requisite amount in controversy as to claims against one or more

defendants but not as to a claim against another defendant, may a federal court
sitting in a diversity action exercise jurisdiction over the claim which, if
litigated alone, admittedly would not satisfy the jurisdictional amount
requirement? In Jacobson, the plaintiff-executor sought redress for the personal
injuries and subsequent death of his decedent allegedly resulting from the
negligence of the defendants, two physicians and a hospital. Federal
jurisdiction was based on diversity of citizenship. Damages well in excess of
$10,000 were sought against the doctors but a state statute limited liability of
the hospital to a maximum of $10,000. The plaintiff could therefore not have
sued the hospital alone in a federal diversity action.
14

The District Court dismissed the action as to the hospital, but the Third Circuit
reversed. In so ruling, the court noted the trend of a number of its recent
decisions recognizing "diversity jurisdiction over an entire lawsuit in tort cases
presenting closely related claims based, in principal part at least, on the same
operative facts and normally litigated together, even though one of the claims, if
litigated alone, would not satisfy a requirement of diversity jurisdiction," 392
F.2d 153. Frankly acknowledging that the Third Circuit's prior cases differed in
some details, Chief Judge Hastie found it persuasive, as do we, that the claims
against the defendants in Jacobson "arise out of a single injury sustained by a
particular person" and that "most of the operative facts are common to the
coupled claims."

15

Thus, in multi-claim diversity cases, the Third Circuit treads the path recently
blazed by the Supreme Court in United Mine Workers of America v. Gibbs,
383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed. 218, where guidelines were announced
for the proper handling of state claims in federal question cases.2

16

In the latter type of case, the question is to what extent, under the doctrine of
pendent jurisdiction, a federal court may adjudicate a claim grounded in state
law when jurisdiction is based on the presence of a federal question. We
recognize, of course, that the question before us whether a federal court may
exercise jurisdiction in a diversity case over a claim which in itself does not
exceed $10,000 is not precisely the same as the question raised under the
pendent jurisdiction doctrine whether a federal court may take jurisdiction in
a federal question case over a claim based on state, not federal, law. An apt
analogy between the two is, however, at once apparent. In each situation, the
federal court has before it a claim which clearly satisfies the requirements of
1331 or 1332, and in each instance the plaintiff asserts an additional claim
which, if litigated alone, would not satisfy a jurisdictional requirement.
Otherwise stated, the question in both the federal question area and the
diversity area is whether a federal court may exercise jurisdiction over a claim

which, standing alone, would not meet the jurisdictional test.

17

We find the force of the analogy most compelling and therefore adopt the
approach enunciated by the Supreme Court in Gibbs. There, the Supreme Court
took occasion to reconsider and relax the strict pendent jurisdiction rule earlier
laid down in Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148. In
Gibbs, Justice Brennan wrote for the Court, and the portion of his opinion
which dealt exhaustively with the pendent jurisdiction doctrine was
unanimously concurred in by the Justices. Discussing the power of the federal
courts to adjudicate state claims in federal question cases, he said:

18

Pendent jurisdiction, in the sense of judicial power, exists whenever there is a

claim "arising under [the] Constitution, the Laws of the United States, and
Treaties made, or which shall be made under their Authority * *", U.S.Const.,
Art. III, 2, and the relationship between that claim and the state claim permits
the conclusion that the entire action before the court comprises but one
constitutional "case." 383 U.S. at 725, 86 S.Ct. at 1138.

19

We find significance in the Court's emphasis on whether the "entire action"

may be viewed as "but one constitutional `case'," and are persuaded, as the
Third Circuit was persuaded, that the same question should be asked in multiclaim diversity cases. If the entire lawsuit before us may be viewed as a single
constitutional "case," the District Court could have taken jurisdiction over the
claim against the grandson, as well as the claims against his mother.

20

Justice Brennan explicitly stated the factors that are critical in determining
whether a single "case" is involved. The Court thought that considerations of
judicial economy, convenience, and fairness should govern:

21

The state and federal claims must derive from a common nucleus of operative
fact. But if, considered without regard to their federal or state character, a
plaintiff's claims are such that he would ordinarily be expected to try them all in
one judicial proceeding, then, assuming substantiality of the federal issues,
there is power in federal courts to hear the whole. 383 U.S. at 725, 86 S.Ct. at
1138.

22

By a parity of reasoning, we are of the view that the District Court was
empowered to hear the present lawsuit in its entirety because the plaintiff's
claims against her daughter-in-law and grandson "derive from a common
nucleus of operative fact" and "are such that [s]he would ordinarily be expected
to try them all in one judicial proceeding."3 The case involves members of a

family who have become embroiled in a dispute over the assets of two trusts
which had been established for a common purpose beneficial to the
grandchildren, and likewise beneficial to their mother to the extent that she was
relieved of financial obligation for their education. The daughter-in-law is
claimed to have aided and abetted the alleged wrongful activity of her children,
one of whom is named as co-defendant.
23

In these circumstances, the litigation should be viewed as a single action, and

the District Court should have exercised jurisdiction over all of the plaintiff's
claims.

24

The fact that a federal court has power in particular circumstances to adjudicate
a claim, which if litigated alone would not be within the federal jurisdiction,
does not mean that a federal court must necessarily exercise that power. In
Gibbs, the Supreme Court observed that federal courts may exercise discretion
in determining whether to adjudicate state claims under the pendent jurisdiction
doctrine and indicated that they should decline to do so where judicial
economy, convenience, and fairness to the litigants will not be served.

25

Our conclusion here is that the exercise of sound discretion dictates that all of
the plaintiff's claims be heard in a single suit. Therefore the judgment of the
District Court is reversed and the cause remanded for further proceedings.4

26

Reversed and remanded.

Notes:
1

28 U.S.C.A. 1332 provides:

(a) The district courts shall have original jurisdiction of all civil actions where
the matter in controversy exceeds the sum or value of $10,000, exclusive of
interests and costs, and is between
(1) citizens of different States * * *.

28 U.S.C.A. 1331(a) provides:

(a) The district courts shall have original jurisdiction of all civil actions wherein
the matter in controversy exceeds the sum or value of $10,000, exclusive of

interest and costs, and arises under the Constitution, laws, or treaties of the
United States.
3

It has been held in a number of recent diversity actions that claims, which if
sued on alone would not be within the federal jurisdiction, could be adjudicated
when coupled with claims satisfying the jurisdictional requirement. See, e. g.,
Wilson v. American Chain & Cable Co., 364 F.2d 558 (3 Cir. 1966); Borror v.
Sharon Steel Co., 327 F.2d 165 (3 Cir. 1964); Lucas v. Seagrave Corp., 277 F.
Supp. 338 (D.Minn.1967); Dixon v. Northwestern National Bank, 276 F. Supp.
96 (D.Minn.1967); Newman v. Freeman, 262 F.Supp. 106 (E.D.Pa. 1966);
Johns-Manville Sales Corp. v. Chicago Title & Trust Co., 261 F.Supp. 905
(N.D.Ill.1966); Morris v. Gimbel Bros., Inc., 246 F.Supp. 984 (E.D.Pa. 1965);
Orn v. Universal Automobile Ass'n, 198 F.Supp. 377 (E.D.Wis.1961);
Raybould v. Mancini-Fattore Co., 186 F. Supp. 235 (E.D.Mich.1960). See also
Note, The Federal Jurisdictional Amount Requirement and Joinder of Parties
Under the Federal Rules of Civil Procedure, 27 Ind.L.J. 199 (1952)

On oral argument of the appeal, appellant abandoned the contention that the
District Court should have permitted her to amend the complaint to assert a
claim for punitive damages, and we therefore do not consider the point